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Congresswoman Staves Off Foreclosure with a Loan Modification

by Morgan on May 21, 2008

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While poor Mr. Bailey can’t get a break with his loan modification efforts with Countrywide a higher-profile figure, California Congresswoman, Democrat Laura Richardson was able to negotiate a loan modification to save her home from foreclosure after joining the House of Representatives.

With our own Congresspeople going in to foreclosure after buying 100% financed housing at the top of the bubble do we really have any chance of avoiding a massive government housing bailout?  Can we demand fiscal responsibility from our representatives?  Is it too much to ask?  Is it even fair to levy that question?  Ms. Richardson says she didn’t recuse herself from the housing bailout package votes in the House, instead  she missed them due to personal reasons, but it would have been prudent of her to do so.

Initial reports stated that her home had gone in to foreclosure, but Representative Richardson stated that the home was never in foreclosure and that she has instead negotiated a loan modification to save her home.

The home, bought in 2005 with 100% financing had a Notice of Trustee Sale was filed for the Sacramento home by the lien-holder, Washington Mutual.

From the article in the LA Land blog:

California Rep. Laura Richardson today denied a published report that her $535,000 Sacramento home had slipped into foreclosure, saying she had renegotiated her loan to keep the home.

The house “… is not in foreclosure and has NOT been seized by the bank,” Richardson, a Democrat from Long Beach, said in a statement. “I have worked with my lender to complete a loan modification and have renegotiated the terms of the agreement — with no special provisions.”

Representative Richardson’s statement in response to the reports:

CONGRESSWOMAN LAURA RICHARDSON

For Immediate Release

May 21, 2008

The story published in the Capitol Weekly regarding residential property that I own in Sacramento requires clarification.

Within a 12-month period last year (2007-2008), I was a member of Long Beach City Council, the District Director for California Lt. Gov. Cruz Bustamante, a member of the California State Legislature, and, now a member of Congress. While the transitioning has impacted me personally, the residential property in Sacramento California is not in foreclosure and hasNOTbeen seized by the bank.

I have worked with my lender to complete a loan modification and have renegotiated the terms of the agreement — with no special provisions. I fully intend to fulfill all financial obligations of this property.

On two housing bills that were cited by the Capitol Weekly, the allegation is that I recused myself from these votes. I did not. I was absent from Washington, D.C., and my duties in the House of Representatives due to the untimely death of my father and his subsequent funeral in California.

I understand that these homeownership issues are a reflection of what many Americans are going through as they fight to keep their homes and to remain financially stable.

Last 3 posts by Morgan

Related posts:

  1. Congresswoman Richardson defaulted on 3 CA properties
  2. Did Rep. Richardson fraudulently overstate her income?
  3. California trys to deter loan modification and foreclosure rescue scams
  4. Avoid Foreclosure With A Personalized Home Loan Modification
  5. California Foreclosure Prevention Act goes into effect tomorrow

  • joe
    Hawkeye!

    I just read this piece (Nor Cal right in my neck of the woods, of course) a few minutes ago. I like that they pushed the article close to midnight instead of putting it in primetime.

    Nice job Morgan.

    Carter
  • ann
    I still believe would it not be easier to just do the loan modifications across the board and stop the bleeding..Years ago there was in existence the dreaded "assumable no qualifying loan"..you gave a certain amount of money down and the loan was yours..plain and simple..well..of course over time lenders realized that this was not a good product..so it was discontinued and as time went by and the homes changed hands and interest rates went down these loans disappeared..This same mentality should be done to loan that are just as toxic today..automatically convert them to a affordable fixed rate as the per the initial rate of the loan..hey if it was teaser then so be it..as time goes by and these homes change hands these rates will disappear..This would stem the tide of foreclosures since 99% of them are due to rate increases and the devaluing of the home(due to foreclosures and inventory)..some may see this as a bailout, but when you are the guy stuck between 2 foreclosed homes and you did the right type of loan, it hurts to see your value go down the drain...
  • rmiguel
    People need to be made more aware of their options in loan modification before making that knee jerk reaction to simply walk away from their homes. In Laura Richardson's case, she had to negotiate terms otherwise face potential career consequences. Others may have walked away from the home simply b/c the equity is upside down. However, loan modification efforts today include negotiations with lenders to write down principal balances. Give borrowers a little equity back and you'll see how quickly they'll get back on track with their mortgage payments. Prior to this year, such a thing was unheard of. If more people could be made aware of lenders new willingness to forgive the difference in value, then maybe we'd see a nationwide effort of people actually fighting to stay in their homes. As a practicing broker, I'd like to see more short refi's than short sales. Right now, hardly any knows what a short refi is.
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